The detention of a Chinese fishing boat captain by Japan is
creating serious strife between the two countries.

The incident has lead to protests all around China,
and now according to WSJ, Beijing is threatening to take
action unspecified punitive against Japan.

Though not directly related, bear in mind that this comes amid
the backdrop of increasing economic tensions.

Tokyo lashed out after it was revealed that China had upped its
buying of JGB, in an attempt to further prop up the yen,
completely counter to their own interest. Conversely, the BoJ's
easing move, was a direct attempt to make the country's exports
more competitive with the Chinese.

There's another dispute happening too. According
to Japan Times, China is going ahead with drilling plans in a
disputed natural gas field

So what's going on is a mix of economic and political tensions.
We'll see how much this continues to play out in the foreign
exchange market, as both countries attempt to weaken the others'
exporters.